SBC and AT&T Merger

With the merger of SCB and ATT, what, if any, cost advantages might be created?

What actions, if any, do you think the government will take? are there specific facts to support your answers

What will be the welfare effects, if any of the merger?

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The various cost advantages will be :

It will bring two big companies together with highly complementary strenghts and customer bases.
This merger will combine AT&T's national and global IP-based networks and expertise with
SBC's strong local exchange, broadband and wireless assets. The combined company will have robust, high-quality network assets, both in the United States and around the globe, and complementary expertise and capabilities. It will have the resources and skill sets to innovate and more quickly deliver to customers the next generation of advanced, integrated IP-based wireline and wireless communications services. For SBC, the combination provides immediate global leadership in the enterprise segment where corporations and governments require complex communication solutions and services and access to advanced national and global networks. (Source: http://sbc.merger-news.com/materials/am.html)

SBC and AT&T expect the proposed transaction will yield a net present value of more than $15 billion in synergies, net of the cost to achieve them. The synergies ramp quickly with a net annual run rate of $2 billion or greater beginning in 2008.

Almost all of the synergies will come from reduced costs over and above expected cost improvements from the companies' ongoing productivity initiatives. Nearly half of the ...

Solution Summary

It will bring two big companies together with highly complementary strenghts and customer bases.

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BCom, SGTB Khalsa College, University of Delhi

MBA, Rochester Institute of Technology

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